CLASSIFICATION OF LEDGER ACCOUNTS FOR CREAMERIES. 1% 
The following Journal entry will illustrate this procedure: 
DEBIT. CREDIT. 
$8.50 John Jones. 
Merehandise Sales........... .. $8. 50 
(For sale of merchandise to John Jones, employee.) 
John Jones would then receive his entire wages and would settle for his account by 
the following transactions: 
DEBIT. CREDIT, 
$8.50 Cash. 
J OTMAV TONES een eee een eee ae ae NG $3. 50 
(For payment of John Jones’ account.) 
Taxes ACCRUED (G 8). 
DEBIT: CREDIT: 
1. With the amount actually paid for 1. With the amount of accrued taxes 
taxes. as shown by the Balance Sheet 
at the time of opening the books. 
2. At the close of the period with its 
proportion of estimated annual 
taxes. 
2 
At the beginning of the fiscal year an estimate of the taxes which will become due 
during the succeeding 12 months should be made. The amount of this estimate, if 
given careful consideration, can be made to approximate very closely the taxes which 
are actually assessed. Normally, this amount will show a credit balance which repre- 
sents the liability for taxes accrued but not due. However, when the tax payment 
is made during the fiscal year there will be a debit balance. This will be gradually 
adjusted as the periodical entries are made. Any balance on this account after the 
yearly taxes have been paid should be transferred at the end of the fiscal year to the 
Taxes account. 
H. RESERVES. 
RESERVE FOR Dousrrut Accounts (H 1). 
DEBIT: CREDIT: 
1. With all accounts charged off as 1, With the amount reserved to cover 
uncollectible. doubtful accounts as shown by the 
Balance Sheet at the time of open- 
ing the books. 
2. At the close of each period with its 
proportion of estimated annual 
| loss due to bad accounts. 
Any collections received on an account that has been previously charged off 
should be credited to this account. This periodical charge should be based on the 
amount of annual sales and previous losses from this source. 
180208°—20—Bull. 865——3 
